Category: Case Summaries

By James Plotkin

In 108 Media Corporation v. BGOI Films Inc., 2019 ONSC 880, the Ontario Superior Court of Justice re-affirmed the predominant line of case law in Ontario holding that when parties insert the words “final and binding” into an arbitration agreement, they intend to preclude an appeal under section 45 of the Arbitration Act, 1991, S.O. 1991, c. 17, either as of right or with leave.

108 Media involved a “sales agency agreement” (SAA) wherein the Applicant, a film and television distributor, agreed to act as sales agent for the Respondent, who produces “low-budget horror films”. The SAA contained an arbitration clause that, among other things, stated the arbitrator’s determination shall be “final and binding”:

Should there be a disagreement or a dispute between the parties hereto with respect to this Agreement or the interpretation thereof, the same shall be referred to a single arbitrator, selected jointly by the parties, and the determination of such arbitrator shall be final and binding upon the parties hereto. (Emphasis added)

Relying on several decisions, including the Ontario Court of Appeal’s 1988 decision in Yorkville North Development Ltd. v. North York, 1988 CanLII 4701 (ON CA), the Court held that the words “final and binding” would have no meaning if they did not preclude an appeal.

Interestingly, Yorkville North Developments was decided three years before the Arbitration Act, a verbatim adoption of the Uniform Law Conference of Canada’s Uniform Arbitration Act (adopted in Alberta, Saskatchewan, Manitoba, Ontario and New Brunswick), came into force. Ontario’s previous domestic arbitration legislation did not provide for appeals, which calls the Court of Appeal’s reasoning into question since parties evidently did not intend to exclude something (i.e. appeals) that did not exist in the law at the time.

It also fails to take account of the reason why this language is generally found in arbitration clauses. This reason is largely historical and has to do with the old recognition and enforcement regime in international arbitration before the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards came into play over 50 years ago. Under most international arbitration legislation, including that in force in Ontario, there is no right of appeal. Rather, this language was historically included in arbitration agreements to avoid the need for what was called “double exequateur”, a requirement that an award to be homologated/recognized at both the seat of arbitration and the enforcement jurisdiction. The New York Convention has done away with that requirement, but the boilerplate “final and binding” language remains in many arbitration agreements, both international and domestic, as a matter of course.

There remains a contrary line of cases that say the words “final and binding” are insufficient on their own to indicate the parties’ intention to exclude appeals (see: Denison Mines Ltd. v. Ontario Hydro (2002), 2002 CanLII 20161 (ON CA); Peters v. D’Antonio, 2016 ONSC 7141). This remains the minority view in Ontario, however.

Despite not resting on the most solid doctrinal footing, it appears the prevailing view in Ontario is that “final and binding” means no appeal, for now.

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In an important decision by Justice Lederer released on July 25, 2017, the Court not only dismissed the plaintiff’s claim in defamation, but it also awarded $7,500 in damages against the plaintiff for having filed the claim in the first place.

The United Soils v. Mohammed decision is noteworthy because it is the first Anti-SLAPP motion under the relatively new s. 137.1 of the Courts of Justice Act to result in damages against the plaintiff. The decision can be read here: http://canadianlawyermag.com/legalfeeds/images/stories/United-Soils-v-Mohammed_2nd-decision.pdf.

In the United Soils decision, the defendant Ms. Mohammed posted comments on Facebook with respect to a decision by her local municipal council amending an agreement with United Soils which operates a gravel pit. The amendment allowed United Soils to deposit acceptable fill from small quantity source sites and hydro-excavation trucks. Several tweets from councillors and the mayor came to Ms. Mohammed’s attention expressing concerns about the risks posed by what these trucks might deposit in the site. Worried about contamination, Ms. Mohammed posted comments about the company and the issue on Facebook. United Soils sent a letter from their lawyer threatening a defamation suit against Ms. Mohammed for her posts on Facebook. Ms. Mohammed did what the lawyer’s letter asked her to do by posting a message on Facebook retracting and apologizing for each prior postings. United Soils sued her anyway.

Ms. Mohammed retained a lawyer and brought a motion under s. 137.1 of the Courts of Justice Act, which is commonly referred to as the Anti-SLAPP provisions. These provisions, enacted in 2015, allow a defendant sued for defamation to bring a motion at an early stage in the lawsuit to attempt to have the action dismissed on the basis that it is a strategic lawsuit against public participation (SLAPP). If the Court finds that the publication dealt with a matter of public interest, the plaintiff must then show that the action has substantial merit, that the defendant has no valid defence and the harm suffered by the plaintiff is sufficiently serious that the public interest in permitting the lawsuit to continue outweighs the public interest in protecting that expression.

In this case, the Court found that the posts made by Ms. Mohammed were in the public interest (which was conceded by United Soils). The Court then found that the action in defamation did not have substantial merit. While Ms. Mohammed’s use of words could have been more carefully considered, the judge was not satisfied that the case had substantial merit. More importantly, the Court spent some time on the fact that Ms. Mohammed apologized. United Soils seemed to question whether Ms. Mohammed really meant her apology when she made it. The Court pointed out that apologies can be made for a variety of reasons, but there is no legal liability for what people may think. The Court concluded as follows at par. 40:

(…) Absent a retraction there is nothing to be gained by proceeding. Katie Mohammed has apologized. There is no continuing harm. The proceeding is not only without “substantial merit”. There is no merit. What Katie Mohammed may or may not continue to think does not change that conclusion.

The Court then analyzed Ms. Mohammed’s defences and found that she had a valid defence to the claim. It also found that the balancing of interests favoured the protection of freedom of expression as opposed to allowing the lawsuit to continue. The defamation action was therefore dismissed.

Most importantly, however, Justice Lederer went on to consider the defendant’s request that United Soils not only pay her legal costs for the action, but also pay her damages for having brought the claim in the first place. This is an interesting feature of the relatively new sections of the Courts of Justice Act which allow the Court to award damages against a plaintiff for filing a claim that is dismissed as a SLAPP suit. Other successful defendants have requested damages, but this is the first reported case in which damages were actually awarded. While the legislation does not provide guidance on how these damages are calculated and what considerations are to be taken into account, Justice Lederer considered the conduct of the plaintiff in this case and the multiple motions that had already taken place and concluded that they established an improper purpose by United Soils in bringing the claim against Ms. Mohammed. The Court considered the damages awarded in Jones v. Tsige for breach of privacy (intrusion upon seclusion) and compared the stress caused by the lawsuit to Ms. Mohammed with the damages awarded in the Jones case. In the end, Justice Lederer awarded Ms. Mohammed $7,500 in damages for the unnecessary stress caused by the lawsuit and the impact on her day-to-day life.

This decision will undoubtedly be used as a precedent by other defendants arguing that the defamation suits filed against them are designed to stifle public participation and were filed for improper motives. It will be interesting to see if the damages awarded in this case will set the bar for future decisions, and whether the analysis employed by Justice Lederer to award the damages will be followed.

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By Jeff Saikaley

The Ontario Court of Appeal confirmed in a recently released decision (http://www.ontariocourts.ca/decisions/2017/2017ONCA0579.htm) that there is no distinction between the print edition and the online version of a newspaper article for the purposes of s. 5(1) of the Libel and Slander Act.

In the John v. Ballingall case, the plaintiff (a rapper who performs under the name of Avalanche the Architect), sued the Toronto Star over an article that he claimed was defamatory and that appeared on the Star’s website on December 4, 2013 and in the print edition on December 9, 2013. His claim was struck on the basis that he did not provide a Notice of Libel in accordance with s. 5(1) of the Libel and Slander Act which provides:

No action for libel in a newspaper or in a broadcast lies unless the plaintiff has, within six weeks after the alleged libel has come to the plaintiff’s knowledge, given to the defendant notice in writing, specifying the matter complained of, which shall be served in the same manner as a statement of claim or by delivering it to a grown-up person at the chief office of the defendant.

On appeal, the plaintiff argued that a Notice of Libel was not required as the article was not published in a ‘newspaper’, but rather on the Internet. Because it was not printed on physical paper, the notice requirement in the Act should not apply. The Ontario Court of Appeal disagreed. The Court held as follows:

[25]        The regime in the LSA provides timely opportunity for the publisher to address alleged libellous statements with an appropriate response that could be a correction, retraction, or apology. Now that newspapers are published and read online, it would be absurd to provide different regimes for print and online versions.

Given that the Act applied and the requirements of s. 5(1) of the Act were not complied with, the appeal was dismissed, confirming the decision to strike the action:

[38]        In addition to the appellant’s failure to comply with the six-week notice period, the three-month limitation period similarly expired long before the appellant issued his statement of claim, sixteen months later.

The takeaway is therefore to ensure that any attempt to sue for an article published online comply with s. 5(1) of the Libel and Slander Act by providing a Notice of Libel within six (6) weeks of the date of publication and commencing an action within three (3) months. Otherwise, the action may be dismissed early on.

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By Lyndee Therrien

In what is being deemed by many as a first in Canada, the Supreme Court of British Columbia awarded damages for the future cost of surrogacy following a fatal motor vehicle accident that left three dead and one sole survivor with life-threatening injuries.

The Plaintiff was 21 years of age at the time of the high-speed head-on collision. As a result of the accident, she was flown by air ambulance to Vancouver General Hospital for emergency surgery. She was in a medically induced coma for almost four weeks and spent a total of 39 days in the acute or traumatic care unit. In the first month of hospitalization, she underwent 10 surgeries.

The only issue at trial was the quantum of damages to be awarded. The parties were in dispute as to the amounts claimed for pain and suffering, loss of capacity to earn income (past and future), loss of interdependency, and cost of future care.

The Court awarded the Plaintiff $3,837,824.32 in damages. Of particular interest however, is one distinct aspect of the future care cost award (which totalled $882,066.00), namely the $100,000 award for future cost of surrogacy. While there was some evidence that the Plaintiff remained fertile after the accident, the uncontested expert evidence was that she would be unable to carry a baby to term as a result of her extensive injuries.

In coming to this conclusion, the trial judge accepted the evidence of two experts, namely that of Dr. Yuzpe, an expert qualified by the trial judge to give opinion evidence in the fields of infertility, gynecology and obstetrics, and reproductive medicine, and that of Dr. Marquette, an expert qualified to give opinion evidence in the field of maternal-fetal medicine. Based on the medical evidence presented, the trial judge found as a fact that the plaintiff would have significant difficulties conceiving a child in the future as a direct result of the abdominal injuries she suffered from the accident. He also found that the Plaintiff would be putting her health and welfare at great risk, to an unreasonable degree, if she were to carry a baby thereby concluding that the best option for the plaintiff to have a biological child would be to hire a surrogate.

The defendant disagreed that it should be responsible for the cost of surrogacy and reasoned that any such award would be akin to court sanctioned illegal activity. The defendant argued that an award for surrogacy costs would be contrary to s. 6 of the Assisted Human Reproduction Act, S.C. 2004, c. 2 (the Act), which makes it illegal to pay a woman to be a surrogate in Canada.

In dismissing this argument, the trial judge concluded that the Act cannot apply outside Canada’s borders. Because the Plaintiff was seeking fees which would allow her to compensate an American surrogate, she would not be contravening the Act and therefore, the public policy argument raised by the defendant was of no concern in the circumstances.

The trial judge concluded that it would not be appropriate to assume that the loss suffered by the Plaintiff could adequately be compensated for within the award for non-pecuniary damages. While the trial judge recognized that the lost ability to carry a child to term caused pain and suffering deserving of compensation, he went on to find that the loss led to a distinct future cost in order to allow the Plaintiff to have a biological child, namely the cost of hiring a surrogate. Having found that the cost was medically necessary and reasonable, and that the necessity arose directly from the accident, the trial judge concluded that the cost must be borne by the defendant.

In support of his decision, the trial judge relied on Sadlowski v. Yeung, 2008 BCSC 456 (CanLII). In that case the plaintiff underwent a hysterectomy and alleged the defendant gynaecologist failed to adequately inform her of her medical condition and treatment options. The operation left the plaintiff infertile, and the plaintiff alleged that had she been properly informed she would not have proceeded with the hysterectomy. The court awarded her $90,000 for the loss of fertility as a separate award from the $100,000 damages awarded for pain and suffering. The court ultimately did not award a separate amount for surrogacy fees because the evidence of her desire to pursue surrogacy was “highly speculative”. There was no evidence that the plaintiff had pursued surrogacy in the four years leading up to the trial, nor that she would in the future.  The court was satisfied that the award of damages for loss of fertility could provide the means to pursue the surrogacy in the future should she choose to.

The trial judge in this case was satisfied that the evidence before him was not “highly speculative”, and was persuaded that the claim for surrogacy fees was medically justified and reasonable. In determining the proper amount, the trial judge relied on the uncontested evidence of Dr.  Yuzpe who testified that the approximate cost involved in hiring a surrogate in the United States ranged between $50,000 and $100,000 per pregnancy by surrogate. The trial judge concluded that an award at the low end of this range was appropriate and awarded surrogacy fees in the amount of $100,000 for two pregnancies ($50,000 per pregnancy).

While the decision is very promising for young female plaintiffs, the decision makes clear that there is a high evidentiary burden required to prove damages for surrogacy fees.

The full decision can be read here: http://canlii.ca/t/h37fh.

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By Gabriel Poliquin

In a unanimous decision rendered on January 27, 2017, the Supreme Court of Canada stated that CPP disability benefits do not constitute disability benefits within the meaning of “disability benefits from a policy of insurance” pursuant to SEF 44 Endorsement.

The purpose of the Endorsement is to prove excess coverage when an underinsured motorist is unable to pay the full amount of a court judgment.  The Endorsement specifies nine sources that give rise to deductions from the amount payable by the insurer to the injured party, one of which are disability benefits from a policy of insurance.

The insurer, Portage La Prairie Mutual Insurance Co. argued that such benefits included CPP disability benefits.  The Court disagreed.  Though the Court had stated in Gill ([1973] S.C.R. 654]) that CPP disability benefits were “so much the same nature as contracts of insurance” that they should be deducted from a damages award.  The Court distinguished Gill from the facts of Sabean.  In Gill, the Court determined that CPP benefits were to be deducted from survivor death benefits from a damages award that arose from a statutory action under the Families’ Compensation Act of BC.  In Sabean, the Court reiterated and applied the contract interpretation principles of Ledcor to the Endorsement, i.e. deductions listed therein should be interpreted narrowly.   The Court opined that, for the purposes of the Endorsement, the damages award was already determined by the Court and thus was a starting point to calculate the amount payable to the injured party.  Since the damages award had already been calculated, there was no risk of overcompensation, which was the concern in Gill.

The Court reaffirmed that the words of an insurance policy should be interpreted as the “average person” would; for the average person a “policy of insurance” does not include a mandatory, statutory scheme such as the CPP.  Conversely, insurers may not rely on their “specialized knowledge of the jurisprudence to advance an interpretation that goes beyond the clear words of the policy.”

 

 

 

 

 

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By Anne Tardif

The class action arises from a 2012 infectious disease outbreak at the Rothbart Centre for Pain Care Ltd, where Dr. Stephen James, an anesthesiologist, administered epidural injections that were infected by bacteria. Ms. Levac, the representative plaintiff, alleged that Dr. James, who was personally colonized with the bacteria, was responsible for the outbreak and was negligent because he implemented a substandard infection prevention and control practice.  Certification was unopposed by all the Defendants, with the exception of a dispute between Ms. Levac and Dr. James about the wording of the common issues.  Ms. Levac also sought a partial summary judgment against Dr. James for breach of his duty of care.

Justice Perell certified the action as a class proceeding and granted a partial summary judgment against Dr. James, finding that he breached his duty of care to class members.  This finding of negligence entailed: (a) a finding of causation for those class members who were infected with the same bacteria as Dr. James; and (b) a finding of general causation for the balance of the class members. To perfect their claims, the first group of class members will have to quantify their damages and the second group of class members will have to prove specific causation and the quantification of their damages.

The case is interesting for two other reasons.  First, the outbreak was investigated by Toronto Public Health (“TPH”).  Justice Perell held that the TPH Reports were admissible for the truth of their contents pursuant to the public documents exception to the rule against hearsay.  The TPH investigators, he held, were charged with a public duty to investigate the outbreak at the Clinic and the investigators’ records were inherently reliable or trustworthy.  Interestingly, Justice Perell concluded that an adjudicative function is not a prerequisite for a document being a public document.

In any event, Justice Perell concluded that there would otherwise be no issue with the representative plaintiff’s experts’ reliance on the facts set out in the TPH reports.  This is because, according to Justice Perell, the facts upon which these experts founded their opinion were uncontestable or uncontested or the facts were admitted by Dr. James who did not seek to cross-examine the experts.  Indeed, Justice Perell noted that Dr. James had the opportunity to cross-examine the representative plaintiff’s experts about the foundational facts, but he did not do so.  As a result, he accepted the truth of the foundational facts.  This is interesting, as it has often been understood that the parties must prove the foundation on which their experts rely, and that a failure to prove foundation does not render the report inadmissible but simply goes to weight (see, for example, Marchand v. The Public General Hospital Society of Chatham, 2000 CanLII 16946 (ONCA); leave to appeal refused, 2001 CarswellOnt 3412).  Why then would a failure to cross-examine an expert on foundation constitute an admission of that foundation?

According to Justice Perell at para. 125, the foundational facts include the following:

(a) epidural injections are an invasive procedure and that risk of infection is a serious concern;

(b) IPAC Practices are designed to reduce if not eliminate the risk of infection from viral, bacterial, or fungal agents;

(c) Dr. James was trained in IPAC Practices and intended to comply with the standard of care for IPAC Practice;

(d) Dr. James invariably and sequentially performed the IPAC Practice described above;

(e) between August 20 and November 25, 2012, he performed 272 epidural injections;

(f) during this period, nine of the 272 patients developed very serious infections requiring hospitalization;

(g) the rate of infection was extraordinarily high for epidural injections;

(h) a high rate of infection can  be explained by a failure to utilize IPAC Practice in accordance with the recognized standard of care;

(i) six of his infected patients were infected with a strain of staphlococcus aureus that was found on Dr. James himself and that was found on the countertop, telephone and physician’s arm rest in the procedure room that was exclusively used by Dr. James;

(j) Dr. James did not remove his wedding ring before administering epidural injections;

(k) from time to time, Dr. James used gloves that were too big for his hands;

(l) Dr. James did not dispute that he may have applied his mask without performing hand hygiene; and

(m) Dr. James did not dispute that he did not have the nose piece/bridge on his mask pinched.

This leads to the second reason the case is particularly interesting.  Justice Perell concluded that it was appropriate to draw an inference of negligence based on these foundational facts, which constitute circumstantial evidence.  These facts, he reasoned, called on Dr. James to explain how his patients became infected without a breach of duty of care on his part. In his view, finding the existence of a rebuttable presumption of negligence on the foundational facts as proved by the representative plaintiff was not tantamount to resurrecting the doctrine of res ipsa loquitur.

Prior to it being abolished, courts could invoke the doctrine of res ipsa loquitur in circumstances in which there was no direct evidence of negligence to create an inference of negligence where an accident occurred that would not normally happen unless someone was negligent and where the defendant was in control of the conditions giving rise to the accident.  Justice Perell clarifies that triers of fact may draw factual conclusions of negligence based on circumstantial evidence.  What they may not do is infer negligence by assuming circumstantial evidence.

You can read the entire decision here: http://www.canlii.org/en/on/onsc/doc/2016/2016onsc7727/2016onsc7727.html?searchUrlHash=AAAAAQAtcGVyZWxsIGNsYXNzIGFjdGlvbiBzdW1tYXJ5IGp1ZGdtZW50IGVwaWR1cmFsAAAAAAE&resultIndex=1

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In June, 2016, the Court of Appeal released its decision in the Paton Estate v. OLGC, 2016 ONCA 458. The appellants were two estates that suffered losses when a law clerk, Spinks, stole money from their trust accounts. The estates sued the respondent which operates casinos where Spinks and her mother lost about $950,000 of the estates’ money. While gambling, Spinks held herself out to be a lawyer.

At the Court of Appeal, the appellants sought to dismiss the judgement of Justice P.B. Hambly that their statement of claim contained no reasonable cause of action. Specifically, the motion judge found that no reasonable cause of action existed in relation to three claims: (1) that OLGC was knowingly in receipt of trust funds, (2) unjust enrichment and (3) negligence. The motion’s judge found that: (1) the fact that an individual held themselves out to be a lawyer could not mean that OLGC had notice that Spinks was gambling with trust money or that this was sufficient to put the OLGC on notice to investigate. (2) To conclude that an unjust enrichment occurred between the appellants and the respondents, one would first have had to have occurred between Spinks and the respondents. Given that OLGC (i) entered into a valid contract with Spinks and (ii) was a bona fide purchaser without notice that the money was obtained by fraud, no unjust enrichment could have occurred. (3) No duty of care was owed by OLCG to the appellants as one would first need to be established as being owed to Spinks which the jurisprudence revealed may only exist in very limited circumstances that did not apply to this case. Even if such a duty existed, it would be negated by the residual policy concerns of indeterminate liability, there would be issues with causation, as Spinks would still have possession over the stolen money, and OLGC would not owe a duty to the appellants to investigate the source of its costumers’ money.

The Court of Appeal, in a two to one decision, found that these were novel claims and that a full factual record was needed to make any definitive judgments about the issues raised in the statement of claim. The majority of the Court of Appeal refused to shut the door on the prospect that casinos owe a duty of care to victims of “problem gamblers”.  First, as to the issue of being knowingly in receipt of trust funds, the motion judge erred by arriving at a factual assertion that OLGC did not knowingly receive trust fund money. Based on the appellants’ allegations, which must be taken as true in the context of the motion, that OLGC had knowledge sufficient to put it on inquiry and subsequently failed to take action, it is not plain and obvious that the cause of action would fail. Second, as to the issue of unjust enrichment, an argument based on the ground of unconscionable benefit may not necessarily fail based on a factual determination that OLGC acted unconscionably with respect to a problem gambler. An alternative argument that requires a trial is that a constructive trust may have been imposed on OLGC. Finally, the Consumer Protection Act may also be of consideration. All of these issues required a trial and could not be dismissed at this stage. Third, as to the claim in negligence, while casinos cannot investigate every customer, there may exist an obligation to do so where an individual is obviously addicted to gambling. Furthermore, the factual finding that casinos would go out of business requires an evidentiary record as does the conclusion that indeterminate liability would be the result of recognizing a duty of care limited to victims of obvious problem gamblers where a reasonable person would have realized that stolen trust funds could be used. Notably, the Court used the analogy of commercial alcohol providers who owe a duty to innocent third parties to demonstrate that it is not plain and obvious that the claim will fail.

Associate Chief Justice Hoy, dissident, would have dismissed the appeal as the appellants failed to plead the facts they required to demonstrate a potential cause of action. (1) She agreed with the motion judge that no facts were pleaded that would be a reasonable person on notice. Notably, she highlighted the fact that just because one spends large amounts of money at a casino does not mean one is spending trust money. (2) That no facts pleaded would reasonably lead to a conclusion that the appellants could vitiate the contract between Spinks and OLGC on the ground of unconscionable benefit. (3) Finally, in the duty of care analysis, there is a possibility that foreseeability may be established. However, there is no reasonable prospect that sufficient proximity could be found and, even if it were found, there would be residual policy concerns of indeterminate liability which would negate a duty of care.

 

 

 

 

 

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